Correlation Between Highway Holdings and LendingClub Corp
Can any of the company-specific risk be diversified away by investing in both Highway Holdings and LendingClub Corp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Highway Holdings and LendingClub Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Highway Holdings Limited and LendingClub Corp, you can compare the effects of market volatilities on Highway Holdings and LendingClub Corp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Highway Holdings with a short position of LendingClub Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highway Holdings and LendingClub Corp.
Diversification Opportunities for Highway Holdings and LendingClub Corp
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Highway and LendingClub is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Highway Holdings Limited and LendingClub Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LendingClub Corp and Highway Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Highway Holdings Limited are associated (or correlated) with LendingClub Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LendingClub Corp has no effect on the direction of Highway Holdings i.e., Highway Holdings and LendingClub Corp go up and down completely randomly.
Pair Corralation between Highway Holdings and LendingClub Corp
Given the investment horizon of 90 days Highway Holdings is expected to generate 5.63 times less return on investment than LendingClub Corp. But when comparing it to its historical volatility, Highway Holdings Limited is 2.62 times less risky than LendingClub Corp. It trades about 0.16 of its potential returns per unit of risk. LendingClub Corp is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 1,362 in LendingClub Corp on September 3, 2024 and sell it today you would earn a total of 302.00 from holding LendingClub Corp or generate 22.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Highway Holdings Limited vs. LendingClub Corp
Performance |
| Timeline |
| Highway Holdings |
| LendingClub Corp |
Highway Holdings and LendingClub Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Highway Holdings and LendingClub Corp
The main advantage of trading using opposite Highway Holdings and LendingClub Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highway Holdings position performs unexpectedly, LendingClub Corp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in LendingClub Corp will offset losses from the drop in LendingClub Corp's long position.| Highway Holdings vs. Deswell Industries | Highway Holdings vs. SCOR PK | Highway Holdings vs. HUMANA INC | Highway Holdings vs. Aquagold International |
| LendingClub Corp vs. Highway Holdings Limited | LendingClub Corp vs. QCR Holdings | LendingClub Corp vs. Partner Communications | LendingClub Corp vs. Acumen Pharmaceuticals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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